Brazil Approves Tax Incentives to Begin iPad Production as Apple Targets its Next Major Market
Brazilian newspaper Folha reports [Google translation] that the Brazilian government has officially approved tax incentives that will allow Foxconn to begin producing iPads in the country. Interministerial Ordinance #34, signed on Monday and published in Brazil's official register today, specifically provides for a reduction in or exemption from certain taxes associated with the production of touchscreen tablet devices lacking a keyboard and weighing less than 750 grams.
According to ministerial decree 34 published Wednesday in the "Official Gazette", the company will be entitled to the benefits provided for in Decree 5906 of September 2006.
The determination provides for exemption or reduction of the IPI (Excise Tax), PIS and Cofins for companies investing in research and development of technology products.
The iPad 2 of course fits within those specifications, weighing in at just over 600 grams with only slight variation among the various models. The ordinance also permits the production of accessories, cables, power supplies and manuals associated with the allowed tablet devices. While the ordinance applies generically to tablet devices, it has clearly been written to support Foxconn's plans for the iPad.
Last April, Foxconn announced a major push to bring iPad production to Brazil, but the company's efforts were slowed as it negotiated with government officials over tax breaks and other issues. As recently as October the company had signaled its intention to begin production by December, and while the company has missed that target it now appears ready to move forward.
Foxconn's Brazilian iPhone and iPad factory (Source: Cult of Mac)The launch of iPad production in Brazil comes at a key time for Apple, as CEO Tim Cook noted just yesterday during the company's
earnings conference call that Brazil is its next area of emphasis after China among the "BRIC" countries with newly advanced economies. Russia and India are the other two countries in that grouping and Cook acknowledged that Apple has begun to "go deeper into Brazil" as its next target, although he cautioned against any expectations of Apple retail stores arriving in the country over the near term.
High import taxes on foreign-made goods have prevented Apple from making significant inroads in Brazil, with iPad pricing currently starting at the equivalent of US$925 for the 16 GB Wi-Fi iPad 2. With Foxconn moving iPad production to Brazil under the new tax incentives, Apple should be able to offer more competitive pricing on the device as production ramps up. Photos of a Brazilian-made 8 GB iPhone 4 showed up in late November, suggesting that Foxconn is also ramping up domestic production of new iPhone devices for Brazilian customers.
Popular Stories
Unidentified governments are surveilling smartphone users by tracking push notifications that move through Google's and Apple's servers, a US senator warned on Wednesday (via Reuters). In a letter to the Department of Justice, Senator Ron Wyden said foreign officials were demanding the data from the tech giants to track smartphones. The traffic flowing from apps that send push notifications...
iOS 17.2 has been in beta testing for over a month, and it should be released to all users in a few more weeks. The software update includes many new features and changes for iPhones, including the dozen that we have highlighted below. iOS 17.2 is expected to be released to the public in mid-December. To learn about even more features coming in the update, check out our full list. Journal ...
Apple today released new firmware update for both the Lightning and USB-C versions of the AirPods Pro 2. The new firmware is version 6B34, up from the 6B32 firmware introduced in November. Apple does not provide details on what features might be included in the refreshed firmware beyond "bug fixes and other improvements," so it is unclear what's new in the update, but prior software releases ...
Apple's Korean suppliers have begun developing smartphone under-display cameras (UDC), paving the way for the first iPhone with a true "all-screen" appearance. According to The Elec, LG Innotek has entered the preliminary development of the UDC, which sits under the display and does not result in a visible hole in the panel when the camera is not in use. A UDC differs from a typical front ...
Recently, MacRumors has received details on the battery currently being tested on the upcoming fourth-generation iPhone SE, and the information corroborates previous findings in relation to the device. The iPhone SE 4, known by its device identifier D59, is expected to use the exact same battery found in the base model iPhone 14. Partially assembled prototypes of the next iPhone SE have been ...
To boost falling iPad sales, Apple has a major refresh planned for the iPad lineup in early 2024, according to Bloomberg's Mark Gurman. Apple plans to debut new iPad Air and iPad Pro models, both of which will feature notable changes. The iPad Air will come in two sizes like the iPad Pro for the first time. The smaller model will continue to measure in at 10.9 inches, but the larger version...
Apple has shared the full release notes for iOS 17.2, which is in the final stage of beta testing and should be released to the public next week. iOS 17.2 includes a long list of new features and changes, including a Journal app, spatial video recording on iPhone 15 Pro models, several improvements to the Messages and Weather apps, a Favorite Songs playlist in Apple Music, and more. iOS...
The iOS 17.2 update that Apple is set to release to the public in the near future will bring support for the next-generation Qi2 wireless charging standard to the iPhone 13 and iPhone 14 models. Qi2 was mentioned in the release notes for the RC version of the update that came out today. With the addition of support for the new standard, iPhone 13 and iPhone 14 models will work with Qi2...
Top Rated Comments
I think that, with a gross margin of 44.7 percent, it wouldn't hurt if Apple paid some taxes.
Brazil is doing what a lot of countries have tried over the years, placing massive tariffs on imported manufactured goods in an attempt to create a local industry. All that happens is that the international producer might set up a local assembly shop of (mostly) imported parts to avoid the taxes, and pockets higher margins in economic rent as even without the tariff higher than world prices can still be charged (there is no competition from imports to keep them honest). They can even get away with a lesser product because the tariff wall protects them from the higher cost to make latest tech (note Brazil currently makes iPhone 4, not 4S).
This strategy never works of course. If the prop of the tariff wall is ever reduced, the local arm of the businesses' first strategy is to squeal a lot, seeking a reinstatement of the tariff or government subsidies instead. And of course, the second strategy is to wind up local operations as the local business structure is uncompetitive with imports, molly coddled as it was behind the tariff walls. In the end all that happens is that the local consumer has over the years paid billions of dollars extra for products that are always just one step behind in a technological sense.
I know this because my own country pursued this exact same strategy sixty years ago, promising a glorious future in manufacturing, but really only leading to a brake on living standards that reached its lowest point in the seventies which only began to be reversed when tariffs started to be cut back. The biggest beneficicairy of our tariff wall was the car industry, which to this day constantly attempts to blackmail government for special treatment. Constantly bleats like a calf being weaned.
Perhaps we ought to do this here, place heavy import taxes on products manufactured in China, India, Brazil, etc, raising the price of the simplest macbook pro and other similar computers to $2,000 or more and we'll see apple moving back to manufacture in the US. That's what the government should have done 10 years ago when manufacturing jobs started disappearing as a result of free trade signed in the 90s, and not ask Jobs "what can be done to bring Apple back to the US?"
But here, no, we eliminated all tariffs that protected US workers, instead giving tax breaks to Apple and every other manufacturer that sent jobs overseas, thus the ongoing destruction of the middle class here. I am TIRED of subsidizing Apple's goddam business. Recently I saw that if iPads were made here they would be about 20% more expensive. I'd feel better paying that knowing Apple was doing the right thing by supporting OUR workforce and OUR country instead of being part and parcel to ****ing slave labor, plus the PR would be phenomenal for them. But no, the shareholders rule, and Apple will horde that 97BN like Uncle Scrooge.
I think some of the responses to this thread points out the issue with America/Americans and their problems with unemployment today. It seems that for some people, instead of looking internally to see how America can become more competitive in the global market, they ask Apple to find a 'solution' for them which makes Apple less profitable.
It is like telling someone making $60K a year that they can probably make due with $30K so they should take a $30K salary so the company can hire someone else for $30K. There, unemployment solved. Why don't people do this?
As I see it, if Apple has $99 billion in the bank from manufacturing outside the U.S.A. - wouldn't they still be happy if it had been, say, $50 billion with manufacturing in America. There comes a point there having less profit, but still pretty good profit, is actually better if it brings back not just retail jobs but the whole manufacturing process to America. It's not just jobs, but the technology, know-how.
Germany has maintained its manufacturing base, and it's only corporate greed in America that has prevented it from doing what Germany has done.
American people, think. Imagine this going on for another 30 years, the continual transferring of manufacturing overseas, simply because of corporate greed. America will become another basket-case economy like Russia with its corruption.
I love Apple products, and have for decades - but I loathe Apple's corporate greed.
For me, Apple's grovelling and dry-swimming in its pile of cash is the epitome of everything that is sick in corporate America - the pursuit of cash over any other principle in life.